The fear was real. Wall Street was ready to celebrate the passing of a US$2 trillion stimulus package, but after partisan bickering on Sunday and again on Monday left the bill in limbo, investors panicked. With the Democrats and Republicans incapable of setting their differences aside while an economic depression loomed, stocks were not the place to be.

So for the first time since 2016, investor selling pushed the Dow Jones Industrial Average below 19,000 points — to an intraday low just above 18,200  — eliminating all the returns the index had made since the night U.S. President Donald Trump was elected. Some of the biggest names in corporate America plunged to levels not seen in years, with aerospace giant Boeing Co. among the most worst hit, trading below US$90 for the first time since 2013.

Then, a glimmer of hope changed things. The two political parties finally found common ground. Help was on the way. That’s all investors who had been sitting on the sidelines on mountains of cash needed to hear to pull the trigger. Between Tuesday and Thursday, the Dow rallied, eliminating 13 percentage points from what had been a 36 per cent nosedive from its highs in February. Boeing led the way, more than doubling in that time.

It might have been tempting — reassuring, even — to call Monday’s lows the bottom of what has been one of the steepest selloffs on record. But Friday’s market volatility, which ended with the Dow dipping more than 900 points, might explain why no economist, strategist, portfolio manager or analyst was eager to call the bottom this week.

“When you look at bear markets, you see this path: you see the shock down, you see some support because there’s some good attractive companies at those valuations, you see a rally over weeks and you get that second leg down where everyone puts their hands in the air and says ‘I’m done,’” said Macan Nia, Manulife Investment Management’s senior investment strategist. “I think we still need that last kick in the stomach.”

These volatile swings are a trademark of bear markets. The 2008 financial crisis is only one example. Between Sept. 15 and Oct. 6, the S&P 500 plunged 33 per cent. In little more than a week, it would rally 23 per cent before retesting its lows again. October ended with another double-digit percentage climb which was swiftly eliminated in November as a new bottom formed. The index would follow this pattern once more before truly bottoming out in March 2009.

The reason markets rallied so hard this week, Nia said, is because investors were, in short order, given two of the three things needed to overcome the current downturn. First, the U.S. Federal Reserve stepped up, injecting further liquidity into the markets through unlimited quantitative easing, and second, the U.S. Congress passed its massive stimulus package.

The one piece still missing, Nia said, is the suppression of the coronavirus’ infection rates. “It’s much too early to claim victory on that,” he said.

How much those infection rates continue to make an economic shutdown necessary will be the key, he said. Nia has orders to work from home until the end of April, but that date seems too optimistic for him.

We’ve hit A bottom, but I’m not confident at all that we’ve hit THE bottom

Peter Boockvar, chief investment officer, Bleakley Advisory Group

The markets appeared to have already priced in historic U.S. unemployment data — a record 3.2 million Americans lost their jobs last week, but investors shrugged it off and the rally continued Thursday. Soaring infection numbers that saw the U.S. surpass China for the most confirmed cases in the world were also ignored.

It’s a foregone conclusion that companies will also have one poor quarter of earnings, but if shutdowns extend into May and June as Nia expects, the markets may have to re-evaluate. An absence that prolonged would begin to bleed into third-quarter numbers as well, he said.

The true impact of the virus on the markets may not be felt until the fall, said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

“We’ve hit a bottom, but I’m not confident at all that we’ve hit the bottom,” Boockvar said.

BMO Capital Markets chief investment strategist Brian Belski said it’s not surprising to see so many people distrust this week’s rally. The focus, especially in a bear market, is on the negatives and not on the fact that investors showed that they’re still willing to buy under the right circumstances.

The financial realm often looks to the past in search of guideposts for what may lie ahead, but they’d be wrong to do so in this case, Belski said. This bear market is an unprecedented one due to the exterior circumstances that powered it and the record number of days in which it was formed. It has also brought levels of volatility to the markets that have never been seen. The triggering of circuit breakers has become a new norm, as has a VIX index trading at higher levels than it did during the financial crisis.

There’s no reason to believe we can’t have these violent moves on the upside like we had on the downside

Brian Belski, BMO Capital Markets

Why then, Belski asks, must we expect that stocks rebound using the same staggered approach?

“Unprecedented has to match unprecedented,” Belski said. “There’s no reason to believe we can’t have these violent moves on the upside like we had on the downside.”

A bottoming process may already be underway, he said, but he wouldn’t call a bottom. From here out, he expects further waves of volatility.

That’s why, even as investors appear to be rushing to dive into stocks, Nia and Boockvar are preaching patience.

Nia said he wouldn’t advise his clients to open any position right now and that he’d prefer to wait until the markets are back down about 30 per cent. Boockvar would also wait for the markets to cool off.

John Christofilos, the chief trading officer at AGF Investments Inc., was less conservative, but still cautious. He won’t stop investors from beginning positions at these levels, but warns them to do so only at 25 per cent increments.

After all, he can’t call a market bottom either.

“Don’t be hero,” he said. “Trying to call a market on one day is quite difficult. You just don’t know. Nobody knows. But when you (are) patient and lay into these trades, you’re better off in the long run.”